Is Jobless Growth Inevitable?

As machines become smarter, the mutually reinforcing relationship between technological progress and human prosperity seems to be growing weaker. But some countries seem to have figured out how to sustain the old dynamic, ensuring that technological innovation benefits all.

ABU DHABI – Ever since the industrial revolution, humans have been ambivalent about technological progress. While new technology has been a major source of liberation, progress, and prosperity, it has also fueled plenty of agony – not least owing to the fear that it will render labor redundant.

So far, experience has seemed to discredit this fear. Indeed, by boosting productivity and underpinning the emergence of new industries, technological progress has historically fueled economic growth and net job creation. New innovations accelerated – rather than disrupted – this positive cycle.

But some are claiming that the cycle is now broken, especially in technologically savvy countries like the United States. Indeed, machines are becoming smarter, with innovations like advanced robotics, 3D printing, and big data analytics enabling companies to save money by eliminating even highly skilled workers. As a result of this “productivity paradox” (sometimes called the “great decoupling”), jobless growth is here to stay. We can no longer take human prosperity for granted, however rosy the aggregate indicators for profitability and GDP growth may be.

Andrew - I am not surprised at all. What else to expect from Mr. Mahroum except ill arguments? Such opinions are not representative of Insead's insight. I have a feeling that the ideas presented here are based on outdated data .. Read below OECD report that states the following on Netherlands
"due to a large fall in the rate of unemployment, and reintegration into employment of a large population with relatively lower skills, during the period under consideration"
http://www.oecd.org/science/inno/39374789.pdf

I expect more than this from INSEAD insiders.
Europe is at a crossroads. The purpose of this venue is to Inform policy from the outlier.
Where is consideration of fecundity trends, immigration rates, trends in 18 and 21 year old attainment, inflation/deflation, sector productivity trends, tax status productivity and income trends, internet penetration.
Policy clearly lacks an overview, a consensus, it's stuck in C20th management ideology of one type or another. This space needs to be offering far more.

It is rather obvious the authors do not know Dutch society too well. As a Dutch citizen and scholar of Dutch entrepreneurship let me explain the key phenomena put forward: part-time work and self-employment. The main reason The Netherlands sees such a high level of part-time work (of both partners in a family) is the (still) high level of equality. It is this sharing of income, wealth and risk (the key characteristics of equality), that cause wages to be relatively high even for low income earners. That allows families to both work part-time by choice, that and the fact equality also makes sure housing, education and health care are affordable and available to all. Finally many Dutch choose to work part-time to be able to take care of their children for two or three days a week, for the reason childcare is quite expensive (this at least partly explains teh difference with the Nordic countries, that have much more universal and affordable childcare)

Compare this to counries with much higher inequality (US, UK) and what we see is also a very flexible labour market, but people feeling constant stress to work as much as they can. Especially wages at the bottom, but also high risk of loosing eonomic position for middle and higher class, leave families little room for choosing to both work part-time. In fact what can be observed in the US is people working double time (multiple jobs) to make ends meet or keep up a lifestyle.

The trend towards entrepreneurship is highly suspect. It is to a rather large degree fuelled by marginal entrepreneurship, pushing formerly employed people into (unvoluntary) self-employment. Also the high productivity in The Netherlands is not mainly caused by these entrepreneurs, but by the highly efficiently run large and medium enterprises.

Finally, the described trends have hardly a thing to do with "the Netherlands has restructured its economic value chain to accommodate a new division of labor between humans and machines, embracing new kinds of economic activity". The Netherlands is indeed doing very well in restructuring its economy, as it has done for at least the past 500 years, which is mainly to be attributed to the fact we have a very open, innovative, well educated society in the economic hart of Europe.

Seconded.
What many don't understand abut tech is it's truly transformative ability to enhance the productivity of all workers, lowering costs, raising affordability. Too many see only the loss of unskilled work rather than the ability of everyone from a jobbing driver to a barrister, to run their accounts and admin on their phone or pad.
Legislation needs to catch up, particularly that which currently prohibits the self employed from advertising on yellow pages, yelp, and the like.

Interesting article tracking the economic transformation and restructuring, but I don't get the sense that it is any kind of success unless you can tell us how the transformation has benefitted people more directly. Having freelancers seems like a sub-optimal outcome unless you can explain how this creates a broader path to new productivity and individual security, for example small business formation and long term financial stability. A major missing piece is an explanation of the accommodation that the government is making or anticipates in making in order to sustain this new structure. For example, does it require more training, more basic income support; more transition support, etc?

I would also suggest a grassroots movement that cherishes human skills, to lay the groung for a global legislative Protection for "human" jobs, for example CVS may one day have a problem using these robot cashier (before boasting about our health);
More over: I need to read more about why people willfully ditch their vvoting, collective bargaining, and boycott powers! It doesn't matter if you have a democracy or not if you take things fir granted.

My dear, what a short-sighted piece. Of course the economy of Netherlands is successfully transitioning to be almost entirely based on knowledge work but that's because they're exporting the fruit of that work to other countries that are way behind. It's the same fallacy that's made when one praises economies that appear to be becoming greener and more sustainable when in reality the real cost is outsourced to developing countries.

We should be thinking global on this issue. The Netherlands won't scale. We don't need every single human being on the planet to be producing creative work because that'd just be too much for others to consume. So yes, jobless growth is inevitable on the global scale but certainly, small individual countries may get away with not bearing the cost just yet, or ever for that matter.

http://www.frostywooldridge.com/articles/overpopulation_in_america.html
Overpopulation in America - a 12 Part Series
By Frosty Wooldridge
Overpopulation in America is a 12 Part Series on overpopulation, carrying capacity, and sustainability. You can read the articles below:

The challenge is great, there is no other solution, that human ingenuity forges its own market share to survive on entrepreneurship to respond on technological innovation that tends to destroy jobs. This apart from the effect of climate change resulting in possible threats that some attribute over productivity of the economy.

Don't forget that the Netherlands has its gas. And that will run out relatively soon (15-20 years from now). The Netherlands is totally behind, and not more than a slow follower when it comes to the big transition of our times: climate action and energy transition. The risks for students have been increased by increasing costs, where future jobs are more uncertain. The self-employment of all those independent workers is not very certain, and they get hit first whenever the economy weakens.

All the white collar work you refer to is probably related to the "double dutch with an Irish Sandwhich' economy - theft of other countries' tax revenue. You weave a compelling tale that there is no decoupling self driving cars, drones, self learning systems and robot factories will shortly raise the bar another level higher. I want to like the message you put forward, but I sense what you are saying is not the reality of the way things are.

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